Smart moves to make when the Fed starts cutting rates

Over the past couple of years, the Federal Reserve aggressively raised its key interest rate to a 23-year high to beat down inflation. Now that inflation has slowed substantially and is expected to cool further, the central bank is expected to embark on a rate-cutting campaign over the next two years, starting as early as September.

Over the past couple of years, the Federal Reserve aggressively raised its key interest rate to a 23-year high to beat down inflation. Now that inflation has slowed substantially and is expected to cool further, the central bank is expected to embark on a rate-cutting campaign over the next two years, starting as early as September. If it does, rates should decline on a wide swath of financial products for Americans, from credit cards and home loans to bank accounts and certificates of deposit, among others. Given how many ways lower rates can affect your finances, here are some things to consider when deciding what steps to take in response. The prospect of lower borrowing costs will be welcome news to those seeking loans or anyone trying to reduce their existing debt loads. But, realistically, how much you’ll save when the Fed lowers rates will depend on how quickly it cuts and by how much each time. The answer for the near term is most likely to be “not that much.” “Interest rates took the elevator going up, but they will take the stairs coming down,” said Greg McBride, chief financial analyst at Bankrate. By that he means: “Rates are not going to fall fast enough to bail you out of a bad situation [this year],” McBride said. “And for savers, [the initial declines] won’t wipe out your interest earnings. Savers will still be way ahead of the game.”